8. Stolt I and Stolt II - some reflections
The material presented to the courts in the two Stolt cases is vast, covering the preparatory story of the relevant legislation, the wording of the pertinent parts of the Convention in a number of countries, as well as decisions and statements from the ECJ and courts in member states. As I cannot say that I have digested this material fully, it is with humbleness that I in the following will give some of my reflections on certain aspects of the two cases.
To my mind, the natural starting point is the contention that Thorco brought a direct action in Norway for the sole purpose of having the Stolt companies joined in the case, in order to plead the Norwegian global limitation rules in the dispute between Thorco and Stolt. The contention has not been repudiated. This gives the background for a litigation which has been enormously costly (and time consuming) - before the substantive question of liability for the collision disaster has been pleaded.
The litigation has made it quite clear that the jurisdiction for a direct action against Gard depends upon Article 11(2) of the Convention. The action is allowed when "permitted", which raises a choice of law question - here a question of either Indonesian or Norwegian law. In the second decision by the Court of Appeal - LA-2018-83695,(1) In the first Court of Appeal decision, LA-2016-170468, the court said that the permitted criterion"shall be understood as a reference to the law of the country where the suit is instigated, both the substantive law and the choice of law rules applicable according to international private law of the country" (my translation).And: "It appears in clear words that Section 7-6(5) [of the Insurance Contracts Act] is s a substantive rule. The right to have a direct action is combined with the obligation to have the suit decided in Norway. The injured party has a claim against the [insurance] company only if the case is brought in Norway. The Court of Appeal cannot see it otherwise than that the rule is unambiguously based on the assumption that Norwegian law is applicable in direct suits brought in Norway, regardless of where in the world the damage occurred. The rule has to be seen as a special choice of law regulation, with priority over what might otherwise be deduced from general uncodified principles" (my translation). it was found that Norwegian law was applicable. This conclusion was not contested, and in Stolt II the majority of the Supreme Court remarked that the Court of Appeal:
"made a final ruling stating that the direct action brought by the Thorco companies against Gard would be decided under Norwegian law. In its order, the Court of Appeal found that the case, overall, is most strongly linked to Norway" (paragraph 34).(2) This is in conformity with the view of the majority of the Supreme Court in Stolt I, see paragraph 92.The minority said that Norwegian law followed from the Insurance Contracts Act Section 7-6(5).
The consequence is (as stated in Article 11(2)) that "Articles 8, 9 and 10 shall apply". According to Article 8 "matters relating to insurance" and jurisdiction are determined by the rules in Section 3 with two reservations: The first one, concerning jurisdiction when the defendant is not domiciled in a Convention state (Article 4), is irrelevant in our context. So is the second reservation regarding disputes arising out of the operations of a branch, agency or other establishment (Article 5(5)). Article 9 on insurer domiciled in a Convention state is, however, important. Subsection 1 gives the injured party the option to sue the insurer, either in the state where the insurer is domiciled (letter a), or in another Convention state or where the plaintiff is domiciled (letter b). Finally, Article 10 on insurance of immovable property is irrelevant.
The implication appears to be that there are no problems connected with a suit in Norway against Gard - with reservations for the solvency requirement (to which I shall revert). The minority in Stolt I had, however, a different view: It held that the requirement for a liability judgment against Gard, viz. the insolvency of the insured, was a condition also "for allowing the action" (paragraph 117). And this, the minority said, had consequences for the interpretation of Article 11 (2):
"When Article 11(2) states that Articles 8, 9 and 10 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted', it is, in my view, natural to take the provision at its word: If such direct actions are not permitted, Article 8 does not apply either, which is in fact the provision stating that the provisions in Section 3 - with a couple of exceptions - are exhaustive in insurance matters" (paragraph 120).
The further consequence was, according to the minority, that allowing jurisdiction based upon Article 2(1) was correct.
Both Article 2(1) and Article 11(2) open for venue in Norway (the latter subject to the permitted issue, see below). However, the position taken by the majority opens for an alternative venue: According to Article 9(1)(b) there is venue "in another state bound by this Convention". And if the matter is seen in a broader perspective, there are a number of jurisdiction possibilities indicated in Article 11(2) which we said were of no importance in our special case. The implications of many venues are not considered by the Court.
With the conclusion that Article 11(2) is decisive, the word "permitted" becomes crucial. As stated above, the Court of Appeal had found, with final effect that the Norwegian law was applicable, and consequently the question was whether Stolt was "insolvent". What kind of considerations has the court to take into account before accepting jurisdiction? In the litigation, two concepts have been used: a general consideration and a concrete one. The former conforms to the traditional Norwegian approach, embodied in the Courts of Justice Act Section 36 (1), stating that the court must base its decision "on the claimant's submission, provided that it has not been demonstrated that the submission is erroneous". The latter requires an evaluation of whether the insured is in fact insolvent, which may involve difficult questions both of law and facts. If, however, the jurisdiction requirement is that the insured is declared bankrupt, the difficulties are nonexistent,(3) This is with reservations for the rare case where it may be possible to argue that the bankruptcy declaration is invalid. cf. the Danish Supreme Court case Assens Havn(4) Sak 15/2015. which it is referred to in Stolt II. With the Norwegian "insolvency" criterion, it is -in my view - a fair summing up which is given by the majority in Stolt II:
"... it would be unfortunate if the courts were compelled to consider the merits of the case before assessing its jurisdiction. This consideration suggests that one should not interpret the "permitted-criterion" the way the respondents argue. An interpretation based on the general regulation of the direct action will to a larger extent liberate the courts from the task of considering substantive conditions for the claim when determining jurisdiction" (paragraph 78).
The weight of such general considerations and the Norwegian procedural background are confronted with the question of whether the Convention has another solution binding on a Norwegian court. The wording of Article 11(2) provides no clear answer. However, in accordance with the principles of autonomous interpretation, the Supreme Court majority concluded as indicated in the citations just above. See also paragraph 79 where it is stated
"that it would be best to rely on the appellants' interpretation of the Article 11(2) of the Lugano Convention".
The Court's summary of the appellants' (Torco's) contention is:
"Insolvency is not a condition for proceedings, but a substantive condition that must be determined during the hearing on the merits. ... with regard to jurisdiction ... it must be sufficient to demonstrate a general right to bring direct actions under applicable national legislation" (paragraphs 21 and 22, my emphasis).
It has been argued that this conclusion is not in harmony with the decision in HR-2019-2206 (Bring):(5) Giuditta Cordero-Moss in Nytt i privatretten No 2 2020 pp. 1517, in a critical article on the Stolt I- and Stolt II-decisions. A number of European truck manufacturers had been fined by the European Commission for price fixing. The Bring companies, most of them Norwegian, had purchased a large number of trucks from these manufacturers, also from one manufacturer's Norwegian subsidiary. This subsidiary was not included in the Commission's decision. Based on the Commission's decision, Bring brought an action before the Oslo District Court against the subsidiary and the manufacturers, invoking Article 6 No. 1 of the Lugano Convention on special jurisdiction. According to this article, the manufacturers may be sued in Norway "provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings". The Court referred i.a. to two previous decisions regarding Article 5 - Rt-2008-1207 regarding Article 5(1) and Rt-2015-129 (Arrow) regarding Article 5(3), and said:
"Against this background, I conclude that when determining the international venue under Article 5 (1) of the Convention on matters relating to a contract or Article 5 (3) on matters relating to tort, the jurisdiction issue is assessed relatively thoroughly; more accurately: an assessment of whether the mentioned criteria for proceedings can be satisfied to a certain extent. Hence, allegations regarding jurisdiction are not taken into account without an assessment. Some substantiation is required also when the issue is disputed. However, this does not entail that the court is to consider whether the claim is likely to succeed. The threshold will prevent that allegations are created primarily to establish jurisdiction.
It is hard to see why the assessment of the procedural criterion that «the claims are so closely connected» as required in Article 6 (1), should derogate much from the assessment of the same under the options in Article 5" (paragraphs 71 and 72, my emphasis).
The criticism of Stolt II is based on the submission that the Bring decision has implications(6) Norwegian «overføringsverdi», Cordero-Moss p. 16. for the Stolt case; in other words, that the threshold should be as high as in the Bring case. In my view, it is not obvious that the requirement for including the foreign manufacturers is, or ought to be, the same as when defining "insolvency". Undoubtedly, there was jurisdiction for Bring's claim against the Norwegian subsidiary, and whether there was jurisdiction also for the foreign manufacturers is comparable to the case against Stolt. However, Stolt II concerns the primary jurisdiction, not the "annexed" litigation.
If the criticism is accepted that the Convention requires a more thorough assessment than stated in Stolt II, then we meet the question of how far the court is obliged to go before accepting jurisdiction. The minority used the expression "a fair chance of succeeding", while the majority said that the requirement must be "satisfied to a certain extent" and that "[s]ome substantiation is also required when the issue is disputed". Leaving aside the ex officio- and the objection- problems, to what extent do the views on probability differ? What is the difference in percent?
As previously indicated, the problems evaporate if the requirement is that the insured entity is bankrupt, i.e. declared bankrupt by the court. Not surprisingly, part of the criticism is that the difficulty is purely Norwegian: the Convention has strict rules - it is said - and the way out of the predicament is to change the Insurance Contracts Act: "Insolvency" should be limited to "bankruptcy".(7) See Cordero-Moss op.cit.
With the law as it is today, it is necessary to decide on what degree of probability is required. Obviously, it is easier to apply the simple test of the majority (whatever percentage this implies). With the requirement advocated by the minority - with "a relatively detailed evaluation" as it was said in the Bring case - this does not preclude the court, at the end of the day, from saying that the insurer is not "insolvent", dismissing the case. However, when the matter in the first round has been argued perhaps extensively, it may be feared that the court feels a certain restriction in deviating from the preliminary decision. And it may be added: is it sensible (cost and time wise) for the issue to be debated fully more or less twice over?